Several leading crypto companies and venture capital firms, including Coinbase, Andreessen Horowitz (a16z), Multicoin Capital, and Paradigm, have backed a Texas apparel company, Beba, and the DeFi Education Fund (DEF) in their ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
The firms filed an amicus brief on October 28, 2024, supporting Beba and DEF’s preemptive lawsuit which challenges the regulator’s classification of digital assets as securities and its lack of clear regulatory guidelines.
The lawsuit, originally filed in March 2024, argued that the SEC’s “unwritten policy” of labelling most digital assets as securities creates regulatory uncertainty and stifles innovation. The focus of the case was Beba’s digital token, BEBA, which was deemed an “investment contract” by the regulator, and thus making it subject to securities laws outlined in the 1933 Securities Act. The SEC moved to dismiss the case in July, arguing that Beba’s lawsuit was premature and lacked a specific rule or directive to challenge.
The supporting firms contend that the SEC’s actions pose a “credible threat” to companies that engage in token distributions, noting the regulator’s tendency to classify airdrops as securities transactions without providing clear regulatory guidance.
The Texas Blockchain Council and the Investor Choice Advocates Network have also backed Beba and DEF, criticizing the SEC for a “litany of enforcement actions” that lack formal guidelines for digital asset issuers.
Also, Coin Center, a crypto policy think-tank, filed a separate brief on October 22, arguing that the DeFi Education Fund incurred costs due to the regulator’s rigid stance on digital assets. It emphasized that the lack of a clear rulemaking process forces crypto organizations to turn to the courts, as they have no other avenue to challenge the SEC’s regulatory approach.
The amicus briefs collectively argue that the SEC should be required to clarify its regulatory stance through transparent rulemaking rather than selective enforcement. They urge the court to reject the SEC’s motion to dismiss the case, acknowledging the regulatory harm caused by ambiguity.
Meanwhile, Coinbase CEO Brian Armstrong recently called on the next SEC chair to apologize to the cryptocurrency sector, citing what he views as unfair treatment under the current leadership of Gary Gensler.
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